Ch. 35

1997 LAWS OF MARYLAND

A CORPORATION THAT IS INCORPORATED UNDER THE LAWS OF THE STATE
AND IS SUBJECT TO THIS SUBTITLE MAY CONVERT TO A MUTUAL HEALTH INSURER
SUBJECT TO THE PROVISIONS OF THIS ARTICLE UNDER A PLAN AND PROCEDURE
APPROVED BY THE COMMISSIONER.

(C) STANDARDS FOR APPROVAL.

THE COMMISSIONER MAY NOT APPROVE A PLAN OR PROCEDURE FOR
CONVERSION UNLESS THE PLAN OR PROCEDURE:

(1) IS EQUITABLE TO SUBSCRIBERS AND CERTIFICATE HOLDERS, IF
ANY, OF THE CORPORATION;

(2) COMPLIES WITH TITLE 2, SUBTITLE 6 OF THE CORPORATIONS AND
ASSOCIATIONS ARTICLE;

(3) PROVIDES THAT NONE OF THE ASSETS OR SURPLUS OF THE
NONPROFIT HEALTH SERVICE PLAN WILL INURE DIRECTLY OR INDIRECTLY TO AN
OFFICER OR DIRECTOR OF THE CORPORATION; AND

(4) IS APPROVED BY AT LEAST TWO-THIRDS OF THE CORPORATION'S
CERTIFICATE HOLDERS WHO HAVE VOTED ON THE PLAN OR PROCEDURE IN
PERSON, BY PROXY, OR BY MAIL UNDER THE NOTICE AND PROCEDURE APPROVED
BY THE COMMISSIONER;

(5) ENSURES THAT THE RESULTING MUTUAL HEALTH INSURER WILL
POSSESS SURPLUS IN AN AMOUNT SUFFICIENT TO:

(I) COMPLY WITH THE SURPLUS REQUIREMENTS UNDER THIS
ARTICLE FOR A MUTUAL HEALTH INSURER; AND

(II) PROVIDE FOR THE SECURITY OF THE RESULTING MUTUAL
HEALTH INSURER'S POLICYHOLDERS AND CERTIFICATE HOLDERS.

(D) CORPORATE STATUS NOT ABANDONED.

A CORPORATION THAT BECOMES A MUTUAL HEALTH INSURER UNDER THIS
SECTION DOES NOT ABANDON ITS CORPORATE STATUS BY CONVERTING, UNLESS
THE PLAN SPECIFICALLY PROVIDES OTHERWISE.

(E) EFFECT ON CERTIFICATE OF AUTHORITY, APPOINTMENTS, FORMS, AND
OTHER FILINGS.

IF THE CORPORATION AT ALL TIMES REMAINS QUALIFIED TO ENGAGE IN
BUSINESS IN THE STATE, THE CERTIFICATE OF AUTHORITY, AGENT APPOINTMENTS,
FORMS, AND OTHER FILINGS EXISTING AT THE TIME OF THE CONVERSION SHALL
CONTINUE IN EFFECT AFTER THE CONVERSION.

(F) EFFECT ON OUTSTANDING CONTRACTS.

ALL OUTSTANDING CONTRACTS OF THE CONVERTING CORPORATION SHALL
REMAIN IN EFFECT AND NEED NOT OTHERWISE BE ENDORSED UNLESS ORDERED
BY THE COMMISSIONER.

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